Sunny Dhillon Sees A Bright Future Investing In Virtual Reality

Sunny Dhillon is a Principal and co-founder of Signia Venture Partners, an early stage venture capital fund based out of San Francisco. Sunny spends his time focused on consumer mobile apps, e-commerce, gaming, and virtual reality. Investing on average between $500k and $3M in an initial check, with 2/3 of his fund reserved for follow on investments. He’s a board observer with Riffsy, Super Evil Megacorp, Artillery Games, and a stealth VR company.

So you are relatively new fund, how are you finding your deals and what are you looking for in potential investments?

My partners Rick Thompson and Ed Cluss have each been building and investing in Silicon Valley companies for 20+ years and there is a deep network of entrepreneurs, angels, and institutional co-investors that they’ve developed over this time. Along with my 3rd partner Zaw, they’ve been phenomenal mentors and made many helpful introductions. Four years ago, I arrived in Silicon Valley and dedicated my personal and professional life to building the network I have today. I made building real, substantial relationships a big priority. One of my best moves here was joining the board of Next Gen Partners, a Silicon Valley venture capital mentoring organization. Alongside attending conferences and networking events, this has helped me find great investment opportunities and develop wonderful friendships.

As far as what I’m looking for – right now I’m spending a lot of my time in gaming, e-commerce, and virtual reality, though I am always interested to hear an innovative idea from a passionate founder, no matter the industry.

What is happening in the gaming space and gaming investing space?

Mobile was super hot, but not so much anymore. For me, PC gaming still remains a bastion for hardcore gamers and will be the hot gaming platform as virtual reality and E-sports come to the foreground.

For mobile, the top category in the App Store and Google Play is largely games. While games monetize better than any other kind of app, it’s still a tough place to make money. There are exceptions of course. The last mobile gaming investment we made was three years ago, in a company named Super Evil Mega Corp, and its multiplayer game, Vainglory, defies gravity. I usually play several matches a day and am stoked that I recently became a ranked player (add me as a friend; my gamertag is BloodySunnyDay!).

Tell me more about what you’re doing in VR

I’m really excited about the potential for virtual reality in the near / intermediate future, and while we’ve only made one investment in VR to date, we plan to do more. It is the next major computing platform, changing the way we interact with one another and the world around us. It’s still very early days and will be 5 years before enough VR headsets are out there. However, before mass penetration of true interactive VR takes root, mobile first VR (e.g. Samsung Gear VR, Google Cardboard) will provide a more near term solution, with a multitude of 360 videos from guys such as VRSE, Felix & Paul, Jaunt, and NextVR. Similarly, early VR gaming adopters will enjoy the Oculus Rift, Sony Morpheus, and Valve-HTC Vive to get their fix from stunning games such as The Heist, Eve Valkyrie, and Dinosaur Island.

Until we have enough VR headsets out there as well as uncertainty around apps and how they monetize alleviates somewhat, investing in content is risky. For the near term, content creation tools and platforms are better bets: i.e. high tech picks and shovels that will be used by content creators in (what we believe will ultimately be) a gold rush in content development. Traditional media monetization models will likely apply to VR content once there’s enough of it and a large enough audience exists. Gamers will come to VR early, as has traditionally been the case on new platforms. Mobile VR will reach critical mass far sooner than PC-tethered (and higher quality) VR, with a flood of 360 video experiences.

Who else do you see that is investing and doing a great job? Who would you like to co-invest with?

As far as VR-strong funds go, I’m a fan of Founders Fund, Advancit, and RRE. Guys like Tipatat Chennavasin, Amitt Mahajan, and Nick Ochoa / Taylor Freeman @ UploadVR also play the role of Gandalf to my Frodo when I’m looking for some VR wisdom J. It’s still early days for the sector though and most financial investors are taking a cautious investment approach until headsets ship next year. Strategic players such as Comcast, Samsung, Qualcomm, and HTC are rightfully making more aggressive investments in these early days.